c The following table prorates the overapplied overhead of 80000 to work in

C the following table prorates the overapplied

This preview shows page 14 - 17 out of 17 pages.

c.The following table prorates the overapplied overhead of $80,000 to work-in-process, finished goods, and cost of goods sold. Account Unadjusted balance Proportion Allocation of $80,000 Adjusted balance Work-in-process $200,000 20% $16,000 $184,0001Finished Goods $300,000 30% $24,000 $276,000Cost of Goods Sold $500,000 50% $40,000 $460,000Total $1,000,000 100% $80,000 $920,000d.If the company had chosen to write off the entire $80,000 of overapplied overhead to cost of goods sold, then income would have increased by $80,000. Because of proration, the income only increases by $40,000. Therefore,income would be higher under the write off approach by $40,000 (= $80,000 - $40,000).
Background image
ACC 312 Fundamentals of Managerial Accounting Midterm Exam II, Spring 2012, Wednesday April 11th2012 15 QUESTION THREE (12 points)Cutting Edge, Inc. (CEI) manufactures the new wands used to draw on electronic tablets. The wand only requires one type of direct material (rubber). During March CEI sold 20,000 wands for $19.00 each. CEI had rubber purchases of 18,500 pounds at $1.60 per pound. The master budget input for one wand is as follows: Material 0.75 lb. of rubber at $1.50 per pound Labor 0.50 hours at $15 per hour CEI budgeted for 20,500 wands to be sold in March at $18.00 each (in the master budget). For the most recent month of March, actualmaterial and labor costs incurred in making 20,000 wands sold in March were as follows: Material $28,800 total cost ($1.60 per pound) Labor 9,500 hours at a total cost of $133,000 Required:Calculatethe following variances for March. Be sure to indicate F or Ufor each variance amount. Direct-Material Quantity Variance[(20,000 x .75) – 18,000] x $1.50 = $4,500U Direct-Material Price Variance($1.50 - $1.60) x 18,500 = $1,850 U Direct-Labor Efficiency Variance[(20,000 x .5) – 9,500] x $15 = $7,500 F Direct-Labor Rate VarianceActual price = $133,000/9500 = $14 per hour ($15 - $14) x 9500 = $9,500 F Sales Price Variance($19 - $18) x 20,000 = $20,000 F Both amount and U/F must be correct. No partial.
Background image
ACC 312 Fundamentals of Managerial Accounting Midterm Exam II, Spring 2012, Wednesday April 11th2012 16 QUESTION FOUR (14 points) Bunyan Furniture manufactures custom-made wood furniture pieces. The company classifies its various jobs as either standard jobs (basic pattern) or special jobs (complex patterns). They charge customers $2,768 for a standard job and $5,890 for a special job. All products are sold as a job not by the piece. Of the 900 jobs they do each year, 650 are standard jobs and 250 are special jobs. Direct manufacturing labor costs an average of $25 per hour. They currently use a single cost pool to allocate overhead. Bunyan Furniture operates at capacity and currently allocates all overhead using carving machine hours as the allocation base (traditional costing system). Bunyan Furniture has been concerned about the accuracy of its current overhead allocation methodology and is planning on implementing an activity-based costing system with five categories for assigning overhead: design, tree-cutting, set-up, carving machine operations, and painting. To see how activity-based costing would affect the costs of standard jobs and special jobs, Bunyan Furniture collected the following information for the fiscal year 2011 just ended.
Background image
Image of page 17

You've reached the end of your free preview.

Want to read all 17 pages?

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes